describes a state where your passive
income is higher than your expenses.
Passive income is all income that you can generate without having to actively work for
it. Example sources of such income are royalties from music or photographs.
The most common source of passive income is probably money generated by
the assets that you own.
This can be dividends from stocks, interest on a bank account, or received rents from an
This page helps you to plan your way to financial independence with such assets.
If your passive income is higher than your expenses, you have achieved
Financial independence calculator
Achieving financial independence depends on a number of simple factors:
- Assets: the total amount of assets you own at the moment
- Savings/month: how much money you can add to your assets per month.
- Yield: the yield/interest that you can achieve with your assets.
- Money needed/month: your monthly expenses to support your life.
- Withdrawal rate/year: percentage of your assets that you can safely withdraw.
The calculation of this value is quite complex, see the Trinity study
for background, and use the FIRECalc calculator
to perform a detailed calculation whether your portfolio size is big enough.
As a rule of thumb, you can either use your yield rate or apply the 4% rule.